What work will keep finance functions busy in the future?
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Our best estimate is likely still the annual wheel. It includes annual reporting, month-end close, quarterly forecasting, budgeting, and strategic planning. During the past two months, we have covered each of these processes and shared hacks to improve them, some more radical than others. We have done so to reduce the time spent on the processes and make them more effective.?
Thinking that the annual wheel will disappear or even transform significantly is a utopia. Many of these tasks are bound by compliance and control must-dos. Still, they could be reduced to minuscule duties that hardly require thought and effort. Others, e.g., from budgeting to beyond budgeting, could see a complete transformation.?
It should prompt us to imagine life in a futuristic finance function, where work is done differently. Likewise, we should consider the capabilities needed for finance and accounting professionals working in such a function. Imagining a future like that will pave the way for making the necessary changes today to ensure we’re future-ready. In this final blog about the annual wheel in Finance, we will therefore consider how processes in the annual wheel could be carried out and what work finance professionals would be doing.?
Continuous production – constant insights?
In the future, it’s fair to assume that the production of numbers will be fully automated. This is made possible by seamlessly integrated financial systems operating on blockchain-based or similar technology. As production is fully automated, it also enables a “zero-time close”, where month-end is no more, but close is done whenever needed and is likely to be more event-driven than calendar-driven. Specific disclosures for annual reporting will be built into the production schedule, making the financial part of the annual report a non-event.?
Moving from the past to the future, the forecasting process will also transform from a four-six-week quarterly event into an event-driven click-on-a-button exercise. This is enabled by machine learning-driven forecasting models that consider financial and non-financial data for the forecast through integrated planning and forecasting systems. Alternative scenarios can easily be modeled using natural language processing models while the potential impact of different action plans can be built on top.?
As both the past and future will be ready on demand, it removes the need for a budgeting process. Instead, strategic progress will be constantly monitored, and resources will be reallocated to more promising areas of the business from stagnant areas. Most of this process will even be automated, as AI-driven models continuously suggest adjustments to resource allocations based on feedback from actual performance and potential strategic realignments.?
This will elevate the finance professional to a strategic finance professional. Key to this is the ability to use the constant stream of insights flowing from the always-on production processes of past and future insight-generating machines. This will enable management to make the right strategic choices and course correct as soon as necessary.?
The endless Data Universe?
Beneath the future front end of the finance function is an endless data universe. Expanded from a data warehouse or data lake, Finance now has access to financial and non-financial data and external data relevant to the company’s overall goals. This also extends beyond quantitative data and into the qualitative data field through the use of emotional AI. This takes the temperature of the context in which the company operates.
This includes both macro and micro sentiments. If two countries clash, it leads to an automatic recommendation of what course correction would be needed. If specific topics gain traction on, e.g., social media, products and services can almost immediately be adjusted, and marketing campaigns tweaked.?
This creates a never-before-seen agility, enabling companies to act in sync with the environment around them. It goes even further. Through Advanced and Predictive Analytics, companies can leverage the Data Universe to predict what will happen in the future and anticipate the demand for existing products and services as well as new products.?
Not only will this drive significant value creation from a company perspective, but it will also create a much more sustainable approach to business. The simple reason is that this paradigm will drive a much more efficient use of resources since they’re only allocated to areas where there’s a real need. It will limit overproduction and put a stop to the creation of products and services with no real demand.?
It sounds unfathomable that the future finance function can drive such a big impact. However, it’s possible even with the technology available today. It’s all about setting the right ambition and training people to make the most of what’s available. Secondly, it’s about stating what capabilities, human and technology-wise, are desirable to be developed. Setting that expectation today will make the development path much shorter and the time to impact much faster.?
Capabilities needed for future finance professionals?
In a reality where most of the work we do today is automated, it would be natural to feel demotivated. If finance professionals do nothing different, their work will be gone, and they’ll be left without a job. However, throughout time, humans have always evolved with the context surrounding them; hence, it would be unnatural to believe it wouldn’t be the case in the age of AI. It’s a fair question to ask though what exact capabilities one should start to develop today. We see four main categories.?
You may have heard about the need to develop these skills before. However, how many finance functions can you point to where these are not in short supply? Probably very few.?
Driven by humans – enabled by technology?
No, the future finance function is not run entirely by artificial intelligence. It will do a large part of the work we do today. However, finance and accounting professionals will have taken on new tasks and drive tenfold the value creation they do today. This is not a depressing future seen from a human perspective. It’s an inspiring future that places the finance function at the center of business.?
The future is ours to grab, but it’s time to make things as concrete as possible. That’s why, after the summer holiday, we will start a new series titled “Finance 2035”. Here, we will review the progress made by McKinsey, Deloitte, and others regarding Finance 2030 and push the predictions five years further into the future.?
As usual, we’re keen to hear from other finance professionals who make predictions about Finance. This is an open invitation to share your views, take part in the series as quote or insight providers, and receive an invite to our LinkedIn Live show. The world is watching, and we want to know what you think!?
For now, we want to ask if the future finance function excites you or concerns you? Can you see what we have described happening, or is it all just wishful thinking? Finally, what steps are you taking today to futureproof yourself?
This was the eighth and final article in our new series, "Hacking the Annual Wheel in Finance." In it, we will explore different hacks to transform our standard work in Finance. You can read the previous article(s) below.
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If you want more trends in finance and accounting, you can read our previous series, "The Top 10 Priorities for CFOs in 2024." This series explored what critical issues CFOs should focus on in 2024.
Catch the insights from our latest series, "The Modern Finance Function," here.
Continue reading below for more articles about trends in finance and accounting.
Anders Liu-Lindberg is the co-founder and a partner at Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn, which has more than 12,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner”, a long-time Finance Blogger, a LinkedIn Learning instructor, and a Top Voice on LinkedIn with 350,000+ followers.
Volunteer at L&T Finance
8 个月I agree!
CFO | VP Finance | Digital Transformation & Financial Strategy | M&A & Post-Merger Integration | Global Operations | International Markets & Industry
8 个月Great exploratory stuff here. Makes me feel dizzy to a certain extent. Main takeway is probably to make sure we stay on top of the wave by combining an 1- always up to date understanding of business drivers 2- people skills and 3- a thorough understanding of what machines / automated processes should deliver (and always be capable to detect AI hallucinations ??. Thanks for sharing Anders ??
Founder at Linkmate | Effortless LinkedIn Leads | 7x More Visitors to Your Profile
8 个月How can predictions & adaptive skill sets future-proof finance functions?
Finance & Admin Professional | MBA Executive
8 个月Excellent insights! It's inspiring yet somewhat scary to understand the impacts and changes of technology and innovation to financial processes. All this changes will make us to focus much more on strategic initiatives.
* Project Manager - ERP Implementation and Optimization * Digital Transformation Strategy Development and Implementation Advisor
8 个月Anders: I agree with everything you mention in this article with the exception of accountants and finance professionals not learning to code. Coding for finance and accounting opens a whole new world of possibilities for the profession. Learning Python and understanding its open source data analytics / data science technology stack, is how I was able to bring the future of accounting and finance to my work today. It was through coding that I learned how to apply advanced analytics to every phase of the accounting and compliance reporting / audit cycle (as well as financial systems implementations and operations). I believe that as finance professionals , making a high-level coding language like Python your ‘secret weapon’ opens up a much brighter future for finance and the organizations / missions we serve..